"I am done," she told Entertainment Weekly. "We just finalized our agreement. Everyone had been working really hard to find an amicable and gracious way of letting go and moving on. It's sad but it's what I wanted."
Heigl told EW that it was family issues, not her film career, that prompted her to approach series creator Shonda Rhimes and ask to be let out of her contract 18 months early.
"I started a family and it changed everything for me," said Heigl, who took a three-month family leave from the ABC drama this season to be with her newly adopted daughter, Naleigh. "It changed my desire to work full-time."
Although she was scheduled to appear in this season's final five episodes, that is no longer happening. As a result, the Jan. 21 episode was her last as Izzie.
"I know I'm disappointing the fans," she said. "I just had to make a choice. I hope I made the right one."
Responding to the news, ABC Studios told EW: "By mutual agreement, Katherine Heigl has ended her successful run as Dr. Isobel Stevens. The studio wishes her well. Everyone at 'Grey's Anatomy' is now focused on delivering a shocking season finale and a great show for seasons to come."